Moody's expects the Iran conflict to leave only a shallow mark on re/insurers across the GCC, at least for now.
The rating agency is betting the fighting will be over in weeks and that shipping through the Strait of Hormuz – the world's most important oil chokepoint – will return to normal before lasting damage is done.
That may prove optimistic. But even under Moody's stress scenario, a 20% drop in regional real estate and equity valuations would shave just 7% off rated re/insurers' total equity, a hit the agency described as absorbable. The real vulnerability, it said, lies not in claims but in investment portfolios.
The Gulf's re/insurance sector had been on a tear before the Iran conflict erupted. Research from Alpen Capital, published in early 2024, projected the GCC market would expand from $34.3 billion in 2023 to $44.4 billion by 2028.
That trajectory appeared on track: figures compiled by Associated Alliance showed GCC premiums grew 8.7% in 2024, with Saudi Arabia up 16.3% and the UAE surging 21.4%.
Yet penetration remained stuck between 1.8% and 1.9%, a fraction of the 7.4% global average - a gap that signals enormous room to grow, but also a market early enough to be knocked off course.
Moody's warned that prolonged hostilities would choke premium growth, intensify pricing competition, and compress margins just as asset values come under pressure.
Whatever the eventual toll on GCC balance sheets, the Iran conflict has already reshaped the marine war risk market. US Energy Information Administration data shows about 20 million barrels of oil a day flowed through the Strait of Hormuz in 2024 – roughly 20% of global petroleum liquids consumption - along with a fifth of the world's LNG trade, most of it from Qatar.
There is no easy workaround. A Logistics Middle East analysis from late February estimated that even with Saudi and UAE bypass pipelines running full, two-thirds of Gulf crude exports remain dependent on the strait. Iraq, Kuwait, and Qatar have no alternative routes, leaving some 14 million barrels a day bottlenecked through a single passage.
The re/insurance market has responded swiftly. S&P Global reported war risk rates as high as 1% of a vessel's insured value for seven-day cover, and all 12 members of the International Group of P&I Clubs – which between them cover 90% of the world's ocean-going tonnage - issued 72-hour cancelation notices on parts of their Gulf war cover.
Marsh's Marcus Baker, global head of marine and cargo, told Semafor he expects rates to settle at double their pre-weekend levels, though still short of the 5% spike triggered by the Ukraine invasion.
Direct claims exposure for GCC re/insurers remains limited - war risk is typically excluded from standard policies in the region and underwritten out of London.
Lloyd's has activated its major event response group to stress-test syndicate books, but cautioned it is "too early to draw conclusions while the situation continues to evolve."
